GBP

Sterling strengthened yesterday as UK PMI data showed business activity grew at its strongest pace since June last year.

Business activity rebounded at a considerable pace in February from the impact of the Omicron variant at the end of 2021, with increased consumer spending in travel, hospitality, and leisure boosting the UK services sector. Data showed the UK services PMI jumped to 60.8, up from 54.1 in January and well above the forecast figure of 55.5.

The PMI data also revealed inflationary pressure is continuing to build in the UK, further increasing expectations for the Bank of England to raise interest rates again at its March policy meeting.

USD

As US markets closed yesterday for President’s Day, the US Dollar lacked significant drivers of movement. However, the USD losses were limited by increased safe-haven demand due to worries caused by the threat of Russia invading Ukraine.

Russian President Vladimir Putin has as of last night, ordered troops into two rebel-held regions in eastern Ukraine, after recognising them as independent states. Russia said the troops would engage in peacekeeping missions in the self-declared Donetsk and Luhansk people’s republics. The US has called this move a pretext for war. NATO members are expected to announce strong sanctions today for Russia and Russian linked businesses.

Key announcements

10.45 – GBP – Bank of England member Ramsden speaks